Redundancy – the basic legal rules

A redundancy situation exists where an employer closes or intends to close the workplace or reduce the number of employees doing a particular kind of work. The employer must:

• adopt redundancy selection criteria which are not discriminatory;

• allow employees selected for redundancy the right to time off to look for other work, provided they have at least two years’ service;

• pay redundancy pay to all employees with at least two years’ service: one and a half weeks’ gross pay for each year of employment not below 41 years of age; one week’s pay for each year of employment below 41 but not below 22 years of age; and half a week’s pay for each year of employment below the age of 22. A week’s gross pay is subject to the statutory maximum of £350 a week for dismissals from 1 February 2009 (a rise to £380 was announced in the Budget on 22 April);

• offer alternative (and suitable) employment where this is available.

If at least 20 redundancies are proposed, the employer must notify the Department for Business, Innovation and Skills (BIS). It must also consult employee reps, with a view to reducing the number of redundancies. Where an employer fails to consult, a union can apply for a protective award, up to a maximum of 90 days’ pay.